The One Job in D.C. That Everyone Wants

  • Hensarling’s chairmanship of House Financial Services ending
  • Patrick McHenry is next in line, but he might not take the job

Jeb Hensarling

Photographer: Michael Nagle/Bloomberg

In the fractious U.S. capital, everyone can agree on this: Being chairman of the House Financial Services Committee is a cushy gig.

With Jeb Hensarling’s term ending, the position will be up for grabs in January 2019 for the first time in six years. A back-bencher can only fantasize about the power, influence and access to money the job brings. House Republicans have begun to jockey for a shot at the gavel. Of course, their struggle would be fruitless if the Democrats wrestle away control of the House in the 2018 mid-term elections, a greater possibility after their victories earlier this month.

“It’s going to be a long year,” said one of the candidates, Representative Frank Lucas of Oklahoma.

The job is one of the best on Capitol Hill. Everyone in finance wants the ear of the chairman, who takes the lead in drafting legislation with consequences for Wall Street and oversees the most powerful financial regulators, like the Federal Reserve. Because the committee is all about money, campaign contributions flow. The chairman can funnel some of them to political action committees or other members of congress, who’d be expected to remember the generosity. The chairman can use that influence to push for cooperation on a legislative agenda.

The frontrunner to replace Hensarling is bowtie-sporting Patrick McHenry of North Carolina, according to some lawmakers and lobbyists. McHenry is the No. 4 Republican in the House, however, and may opt instead for a leadership position, if one is available. At this point, he’s pursuing both.

“Congressman McHenry is focused on his current duties,’’ said spokesman Jeff Butler. “He’ll make a decision on his plans for next Congress after the midterms.’’

Dare to Dream

That means other likely candidates can dare to dream. They include, by their own admission, Oklahoma’s Lucas, California’s Ed Royce, Peter King of New York and Missouri’s Blaine Luetkemeyer. Bill Huizenga, from Michigan, and Wisconsin’s Sean Duffy, a former reality TV star, are also possible contenders. The list will likely change and grow in the next year.

Fund-raising is an important part of the chairmanship, and the ability to attract contributions an essential prerequisite for the job. Candidates are under pressure to show they can bring in lots of cash for themselves as well as their friends on Capitol Hill and the Republican Party.

Party leaders keep track. The National Republican Congressional Committee expects chairmen on panels such as financial services to raise at least $1.2 million for the party during this election cycle, Representative Ken Buck of Colorado wrote in his book, “Drain the Swamp.’’

“If you want to be a committee chairman, you need to show you’re a good team player,’’ said Michael Beckel, an analyst at Issue One, which tracks campaign finance. “Campaign contributions are a way members of Congress forge relationships and reward their allies so their allies stick with them in time of need.’’

Hensarling steered more than $3 of every $5 he raised to the NRCC, according to Beckel. The panel’s top Democrat, Maxine Waters of California, transferred about 19 percent of her funds to the Democratic Congressional Campaign Committee, Beckel found.

Book Club

Committee chairmen are expected to make phone calls, appear at fund-raisers and host countless events on behalf of colleagues. For more than a decade, the GOP financial services chairman has sponsored a monthly book club, where Wall Street lobbyists gather to discuss literature with a Republican panel member who can haul in as much as $80,000 in contributions.

Patrick McHenry

Photographer: Andrew Harrer/Bloomberg

When it comes to sharing the wealth, McHenry has transferred more than $479,000 to the NRCC this election cycle, according to public disclosures. Lucas, former chairman of the House Agriculture Committee, has shifted $227,000 to local and national Republican groups, while Luetkemeyer has shared more than $105,000, the data show. Royce has given more than $10,000 to GOP fundraising groups. The data include direct transfers from one committee to another.

Top Fundraisers

When it comes to total fundraising, the biggest House GOP rainmaker is House Speaker Paul Ryan, who has raked in a total of $10.6 million, according to data compiled by the Center for Responsive Politics. Among the current members of the financial services panel, Steve Stivers of Ohio has attracted the most funds, raising nearly $2.1 million, the data show. Stivers is also chair of the NRCC.

One thing big-bank lobbyists are counting on in the next GOP chairman is someone more aligned with their interests than Hensarling. The Texan has been known as a prickly populist with unyielding small-government views who’s not always pushing in the same direction as Wall Street.

For example, in 2014, Hensarling moved to shut down the Export-Import Bank, which helps institutions such as JPMorgan Chase & Co. finance deals overseas. (He didn’t succeed.) His signature overhaul of the Dodd-Frank Act would free large banks from a litany of rules, but only if they agreed to hold billions of dollars in capital. (Stalled in the Senate.)

Wall Street Influence

Finance lobbyists complain that Hensarling hasn’t been very effective. No major piece of legislation he’s introduced during his tenure has even advanced in the Senate, where Democratic support is necessary.

“The committee in recent times hasn’t been able to turn ideas into law,” said Charles Gabriel, a financial-regulation analyst at Capital Alpha Partners in Washington. “Hensarling’s tenure as chairman has been marked by relatively low legislative output.”

McHenry, on the other hand, has carefully built a reputation as an affable pragmatist who’s able to work across party lines to advance issues that matter to Wall Street. He’d likely pursue a deregulation agenda consistent with President Donald Trump’s. He’s also made fintech a top priority.

Earlier this year, McHenry brought his toddler daughter with him to cast a contentious committee vote on reversing some financial rules. The younger McHenry helped defuse
partisan tension and elicited laughter from even McHenry’s staunchest Democratic opponents.

Of the 20 top contributors to McHenry’s campaign this year, 15 are financial-services firms, including billionaire John Paulson’s hedge fund.

Bank Capital

McHenry has been willing to work behind the scenes to help Wall Street get what it wants. Earlier this year, he wrote to Federal Reserve Chair Janet Yellen, asking her to stop negotiations with international regulators over some European bank-capital rules that Wall Street firms loathe.

Luetkemeyer, who chairs the subcommittee that writes consumer-finance laws, has been a champion of slashing regulations for credit-card companies and is leading the charge to ease some rules for regional banks. He said he’d run for chairman only if McHenry decides not to.

“I think I have a lot of qualifications for the position,” said Luetkemeyer, a two-termer whose district is just west of St. Louis.

King, a Long Islander who’s the senior GOP lawmaker on the committee, said he’s thinking about throwing his hat in the ring.

“I want to keep my options open,” King said. He noted that he’s spent more time on homeland-security issues over the years.

Royce, too, has been primarily focused on other matters as chairman of the House Foreign Affairs Committee. As financial services chairman, housing finance would likely be a priority.

Maxine Waters

If Democrats win the House, it could mean years of headaches for the finance industry. Waters is next in line to get the chairmanship.

Democrats “plan on taking back the House and yes, I aspire to that position,” Waters told Bloomberg TV. For years, she’s supported tougher oversight of Wall Street, including breaking up the biggest banks.

Selecting the next chairman is a long and tricky process. It won’t happen until after the November 2018 mid-term election, when a steering committee of congressional leaders recommends its choice.

Wall Street lobbyists work to make sure their favorite candidate gains an edge. It always helps if he’s popular with the right people, and seniority plays a role. Republicans have term limits; Democrats don’t.

“It’s going to be a real horse race,” said Brad Sherman, a Democratic committee member from California.

— With assistance by Julie Hyman, and Erik Wasson

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